SOCAN loses 53 million in one of its subsidiaries

The country’s largest copyright collective, SOCAN estimates it lost $53 million after developing a platform it thought would sell elsewhere in the world, but which ultimately turned out to be a money pit.

The Society of Composers, Authors and Music Publishers of Canada (SOCAN) finally announced in 2020 the discontinuation of its Dataclef division. Just two years earlier, she had launched with great fanfare this service, which was based on a large database of songs, thus making it possible to better identify the royalties to be paid.

The short adventure resulted in significant losses. In its financial report for the year 2019, published in the middle of the second wave of the pandemic in general indifference, SOCAN deplores a shortfall of 41.7 million dollars for Dataclef. A significant sum for SOCAN, which reported revenues of $405.6 million that year.

No losses for members

Since then, SOCAN has clarified that it is in fact 53 million dollars that have been lost in all and for all in the Dataclef saga. “It was not a mistake. The execution could have been different, but the strategy was there. We just understood that additional investments were necessary, whereas SOCAN is not a big company. We preferred to return to our primary mission,” explains SOCAN CEO Jennifer Brown, who was not in office when Dataclef was launched.

Dataclef was not designed to meet the needs of SOCAN’s approximately 175,000 members across the country. Rather, this service was intended for other overseas copyright collecting societies. We hoped to get new income by selling the platform. In the end, it was only sold to two organizations in the world, one in India, the other in the Netherlands Antilles.

Setting up the Dataclef database required the purchase of two companies: Audiam and MediaNet. Both companies were sold last year to American interests, which reduced the losses.

SOCAN assures that the dismantling of Dataclef did not result in lower royalties for members. “The recovery plan announced to our members in 2020 in connection with this loss continues, and we have regularly updated them on this subject. There is still no impact on our members’ royalties, which is the fundamental principle at the heart of this plan. In a preliminary report published last March, SOCAN prided itself on having collected record amounts for its members in the past year.

Departure of the former general manager

The general manager, Jennifer Brown, also specifies that the failure of Dataclef has nothing to do with the departure of its predecessor, Eric Baptiste. After ten years in office, Eric Baptiste announced his sudden resignation as general manager of SOCAN in April 2020, a few weeks after the start of the pandemic. Seven months later, the losses related to Dataclef were revealed to the members.

Since then, Eric Baptiste has been running QwantumRights Solutions, a music and copyright consulting company. He is surrounded by four high-ranking SOCAN alumni, all of whom left their positions around the same time as him. Two of them specifically managed the Dataclef subsidiary.

Eric Baptiste declined our interview requests. “No longer with SOCAN, I am unable to comment on its affairs,” he simply said by email.

SOCAN is currently under fire for a completely different story. A class action request was filed at the end of September, because Quebec artists believe they were penalized for part of 2019 and 2020. The way SOCAN calculated royalties at the time would have reduced the weight of radio stations. of Quebec. Even though the collective copyright management society quickly changed its model, and the situation is now restored, it refuses to compensate French-speaking artists for the income lost during this period.

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